Parliament clears Bill allowing 100% foreign ownership in insurance sector

Parliament has approved legislation allowing 100% foreign direct investment (FDI) in India’s insurance sector, clearing the way for full foreign ownership as the government looks to attract fresh capital and expand insurance coverage.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was passed by both Houses this week, raising the FDI cap from 74% to 100%, Press Trust of India reported.

The Bill amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999, aligning India’s insurance regime more closely with global norms while strengthening the regulator’s powers.

Industry executives said the move could unlock long-awaited foreign capital and accelerate growth in a sector that remains underpenetrated. India’s insurance density and penetration continue to lag global averages, despite steady expansion over the past decade.

Calling the legislation a landmark reform, Tapan Singhel, managing director and chief executive of Bajaj General Insurance and chairman of the General Insurance Council, said the Bill strengthens policyholder protection, improves transparency and builds trust in the system, PTI reported.

Singhel said the changes would help widen insurance coverage, create jobs across the value chain and make insurance products more affordable and accessible.

Executives at foreign-backed insurers also welcomed the decision. Anup Rau, managing director and chief executive of Generali Central Insurance Company, said allowing 100% FDI would attract overseas insurers and encourage new entrants, leading to stronger competition and better pricing for customers, according to PTI.

The reform would also help scale the wider insurance ecosystem, Rau said, adding that it could support robust sector growth over the next two decades.

Others pointed to balance sheet constraints faced by insurers. Rakesh Jain, chief executive of IndusInd General Insurance Company, said stronger capital bases would allow insurers to invest in underwriting capabilities, digital infrastructure and climate-resilient risk solutions.

Legal and investment advisers said the ability for foreign shareholders to exercise full management control could be a decisive factor. Aravind Venugopal, partner at Khaitan & Co, said global insurers and financial sponsors were likely to show strong interest as full ownership improves governance, accountability and speed of execution.

While the government has positioned the reform as pro-growth, implementation will be closely watched. Analysts say regulatory clarity, distribution challenges and execution risks will determine how quickly foreign capital translates into deeper coverage and improved consumer outcomes.

With the Bill now cleared, insurers and investors are expected to move swiftly to reassess ownership structures and expansion plans, potentially reshaping India’s insurance landscape over the coming years.